Present-Biased Preferences and Credit Card Borrowing
American Economic Journal: Applied Economics
vol. 2,
no. 1, January 2010
(pp. 193-210)
Abstract
Some individuals borrow extensively on their credit cards. This paper tests whether present-biased time preferences correlate with credit card borrowing. In a field study, we elicit individual time preferences with incentivized choice experiments, and match resulting time preference measures to individual credit reports and annual tax returns. The results indicate that present-biased individuals are more likely to have credit card debt, and to have significantly higher amounts of credit card debt, controlling for disposable income, other socio-demographics, and credit constraints. (JEL D12, D14, D91)Citation
Meier, Stephan, and Charles Sprenger. 2010. "Present-Biased Preferences and Credit Card Borrowing." American Economic Journal: Applied Economics, 2 (1): 193-210. DOI: 10.1257/app.2.1.193Additional Materials
JEL Classification
- D12 Consumer Economics: Empirical Analysis
- D14 Personal Finance
- D15 Intertemporal Consumer Choice; Life Cycle Models and Saving
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